Kadant(US:KAI)2025-04-29 20:48Kadant Inc. First Quarter 2025 Earnings Release First Quarter 2025 Financial and Operational Highlights Kadant Inc. reported Q1 2025 results largely in line with expectations, achieving record aftermarket parts demand and strong margins despite a decline in overall revenue and EPS - Management noted that despite increasing geopolitical and trade uncertainties, the company's performance was in line with expectations, highlighted by record demand for aftermarket parts and strong execution by operations teams, which contributed to strong margins and healthy free cash flow5 Q1 2025 Key Financial Metrics | Metric | Value | Change vs. Q1 2024 | | :--- | :--- | :--- | | Bookings | $256 million | +3% | | Revenue | $239 million | -4% | | Gross Margin | 46.1% | +150 bps | | Net Income | $24 million | -3% | | GAAP EPS | $2.04 | -3% | | Adjusted EPS | $2.10 | -12% | | Adjusted EBITDA | $48 million | -8% | | Free Cash Flow | $19 million | +15% | First Quarter 2025 Financial Performance Q1 2025 revenue decreased 4% due to organic decline, while gross margin improved, bookings grew 3%, and adjusted EPS fell 12% Q1 2025 vs Q1 2024 Performance Comparison | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $239.2M | $249.0M | -4% | | Organic Revenue | - | - | -5% | | Gross Margin | 46.1% | 44.6% | +150 bps | | Net Income | $24.1M | $24.7M | -3% | | GAAP EPS | $2.04 | $2.10 | -3% | | Adjusted EPS | $2.10 | $2.38 | -12% | | Adjusted EBITDA | $47.9M | $52.2M | -8% | | Free Cash Flow | $19.0M | $16.6M | +15% | | Bookings | $256.2M | $248.4M | +3% | - The 4% revenue decrease to $239.2 million included a 5% organic decline, a 3% positive impact from acquisitions, and a 2% negative impact from foreign currency translation6 - Bookings increased 3% to $256.2 million, driven by a 2% organic increase and a 4% contribution from acquisitions, which was partially offset by a 3% unfavorable foreign currency effect9 Business Outlook Kadant revised its full-year 2025 guidance downwards for revenue and adjusted EPS due to geopolitical uncertainty, tariffs, and project delays - The 2025 outlook was negatively impacted by estimated incremental tariff costs of $5 to $6 million ($0.32 to $0.39 per share) and customer delays of large capital projects, pushing associated revenue into 202611 Full-Year 2025 Guidance Revision | Metric | Previous Guidance | Revised Guidance | | :--- | :--- | :--- | | Revenue | $1.040B - $1.065B | $1.020B - $1.040B | | GAAP EPS | $9.63 - $9.98 | $8.97 - $9.17 | | Adjusted EPS | $9.70 - $10.05 | $9.05 - $9.25 | Second Quarter 2025 Guidance | Metric | Q2 2025 Guidance | | :--- | :--- | | Revenue | $243M - $250M | | GAAP EPS | $1.89 - $1.99 | | Adjusted EPS | $1.90 - $2.00 | Segment Performance Flow Control grew in Q1 2025, while Industrial Processing declined and Material Handling remained stable, with parts and consumables revenue increasing to 75% of the total Q1 2025 Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change | | :--- | :--- | :--- | :--- | | Flow Control | $92,441 | $86,682 | +$5,759 | | Industrial Processing | $89,524 | $105,861 | -$16,337 | | Material Handling | $57,245 | $56,432 | +$813 | Q1 2025 Bookings by Segment (in thousands) | Segment | Q1 2025 Bookings | Q1 2024 Bookings | Change | | :--- | :--- | :--- | :--- | | Flow Control | $99,987 | $94,670 | +$5,317 | | Industrial Processing | $92,366 | $89,877 | +$2,489 | | Material Handling | $63,865 | $63,883 | -$18 | Q1 2025 Gross Margin and Operating Income by Segment | Segment | Gross Margin | Operating Income (in thousands) | | :--- | :--- | :--- | | Flow Control | 53.3% | $22,752 | | Industrial Processing | 44.1% | $16,832 | | Material Handling | 37.7% | $7,535 | - Revenue from parts and consumables increased to 75% of total revenue in Q1 2025, up from 69% in Q1 202421 Consolidated Financial Statements (Unaudited) This section presents the unaudited Q1 2025 consolidated statements of income, balance sheet data, and cash flow information Consolidated Statement of Income For Q1 2025, Kadant reported revenue of $239.2 million, net income of $24.1 million, and a diluted EPS of $2.04 Q1 2025 Consolidated Statement of Income (in thousands, except per share data) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $239,210 | $248,975 | | Operating Income | $35,586 | $36,927 | | Income Before Taxes | $32,265 | $32,839 | | Net Income Attributable to Kadant | $24,063 | $24,689 | | Diluted EPS | $2.04 | $2.10 | Consolidated Balance Sheet As of March 29, 2025, total assets were $1.435 billion, with total liabilities of $548.9 million and debt obligations of $274.9 million Balance Sheet Data (in thousands) | Account | March 29, 2025 | December 28, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash, Cash Equivalents, and Restricted Cash | $93,805 | $95,946 | | Total Assets | $1,435,439 | $1,430,345 | | Liabilities & Equity | | | | Debt Obligations | $274,936 | $286,504 | | Total Liabilities | $548,869 | $572,217 | | Stockholders' Equity | $886,570 | $858,128 | Cash Flow Data Q1 2025 operating cash flow was flat at $22.8 million, while free cash flow increased 15% to $19.0 million due to lower capital expenditures Q1 Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Cash Flow | $22,835 | $22,831 | | Capital Expenditures | ($3,836) | ($6,271) | | Free Cash Flow (a) | $18,999 | $16,560 | Reconciliation of GAAP to Non-GAAP Measures This section details the reconciliation of non-GAAP measures like organic revenue and adjusted EPS to their comparable GAAP figures - Non-GAAP measures are used by management to understand trends and forecast performance, excluding items not indicative of core operating results141516 Q1 2025 Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $24,063 | $24,689 | | Amortization of Acquired Profit (Net of Tax) | $296 | $2,369 | | Acquisition Costs (Net of Tax) | $315 | $930 | | Adjusted Net Income (Non-GAAP) | $24,674 | $27,988 | Q1 2025 Reconciliation of Operating Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Income (GAAP) | $35,586 | $36,927 | | Adjustments (Acquired Profit, Backlog, etc.) | $698 | $3,554 | | Adjusted Operating Income (Non-GAAP) | $36,284 | $41,271 | | Depreciation and Amortization | $11,634 | $10,940 | | Adjusted EBITDA (Non-GAAP) | $47,918 | $52,211 |